A £350 million takeover of department store chain House of Fraser could be unveiled later this week, reports said yesterday.

The agreed deal for the 61-store retailer will add another slice of the UK high street to the portfolio of Iceland investment group Baugur.

It is expected that Baugur will use the chain as a showcase for the fashion brands that it already owns or has stakes in, such as Oasis and Coast.

Due diligence on House of Fraser, which has a number of outlets in the West Midlands, has been taking place since the spring. According to one report yesterday, an agreement had been reached with the company's pension trustees over a £106 million deficit.

Footwear entrepreneur Don McCarthy is likely to be named as non-executive chairman with Moss Bros chief executive Philip Mountford set to lead the chain if the deal goes through. One report said current House of Fraser boss John Coleman stood to make almost £6 million from the sale, including through shares worth £1.6 million.

Baugur is working with Halifax Bank of Scotland, Icelandic investment group FL Group and Kevin Stanford, the co-founder of Karen Millen, on the offer.

Baugur's other UK retail investments include Hamleys and the Iceland supermarket chain. It also owns tea and coffee vendor Whittards of Chelsea, a ten per cent stake in Woolworths and owns a number of clothing brands that House of Fraser stocks, such as Karen Millen and Whistles.

House of Fraser has been the subject of intense bid takeover speculation in recent months with private equity group Apax Partners linked to an approach before Baugur. The retailer posted a 4.6 per cent rise in pre-tax profits last year to £27.3 million, with stockbroker Seymour Pierce forecasting the figure to rise to £29.5 million this year.